Should lower-tier private labels avoid being ‘ethical’?
A university study finds lower-tier private label brands don’t gain much benefit from ethical positioning in the form of a consumer’s willingness to pay more. Indeed, such a strategy can backfire against economy brands.
The study from Concordia University in Montreal published in the Journal of Retailing found that, for premium private label brands as well as national brands, consumers expect to pay more for products with ethical attributes, including claims of being environmentally friendly, sustainably sourced or fair trade.
As such, ethical attributes represent a “win-win-win situation” for premium store brands, which may improve their competitiveness against national brands. Said Bianca Grohmann, Concordia Research chair in marketing and study co-author, “Companies see increased profits, consumers get improved products, and the environment experiences better protection.”
Nielsen’s study from last fall, “The Sustainability Imperative,” similarly found that 66 percent of global respondents say they’re willing to pay more for products and services that come from companies that are committed to positive social and environmental impact, up from 55 percent in 2014 and 50 percent in 2013.
However, the Concordia University study found store brands with a lower price point did not benefit from the presence of ethical attributes aimed at enhancing social welfare or environmental protection.
Onur Bodur, Concordia marketing professor and the study’s lead author, said a higher price point signals a standard or premium quality tier positioning that is further strengthened by benefits associated with the ethical attribute (for example, a healthier product).
“These sorts of positive evaluations do not extend to low-priced store brands simply because ethical attributes aren’t seen to contribute to the economic benefit which arise from their purchase,” she said.
In fact, the reverse is true. When ethical attributes are eliminated from economy store brands, their perceived value increases. “Consumer evaluations are in line with this argument,” Ms. Bodur said.
- Eco-friendly store brands are a ‘win-win-win situation’ – Concordia University
- Green Generation: Millennials Say Sustainability Is A Shopping Priority – Nielsen
- The Sustainability Imperative – Nielsen
Should ethical positioning be reserved for premium private label grocery brands rather than economy brands? Does it make sense that some brands gain a bigger price boost from ethical stances than other brands?